T-Mobile G1 costs only £92 to make

So why is it that we can we only get it free on a £40 tariff?

T-Mobile's G1 handset, manufactured by HTC, has been broken down on a cost basis, and it turns out it comes in at a wallet friendly £92.

Analyst firm iSuppli has done the donkey work on this one and worked out the cost of all the parts on the handset, and has found it's pretty comparable to other handsets on the market.

For instance, the recently launched BlackBerry Bold comes in at around £105 per handset, so to make one of the hottest phones of the year for less is no mean feat.

Break it down

The breakdown is as follows:

The baseband, which contains the processor and modem functions, costs around £18. The 3.2-inch touchscreen display is next up at about £13, and after that the 3MP camera with autofocus represents the next most expensive segment at around £8.

Finally, we see the Radio Frequency (RF)/Power Amplifier (PA) portion, which provides the super-fast HSDPA connection, costing about £6.

Overall, it seems like HTC haven't skimped too much on the components, and given the license-free (ish) aspect of the Android OS, we have to wonder why the phone only comes on such an expensive tariff.

But this is the first Android phone, and the research and development costs haven't been brought into this virtual breakdown, so let's just give T-Mobile the benefit of the doubt for now.